Penwest Pharmaceuticals Co. has entered into a licensing agreement with Prism Pharmaceuticals, Inc. granting Prism exclusive rights to market Penwest's PW2101 in the United States and Canada.

PW2101 is a beta blocker currently under review by the Food and Drug Administration (FDA) intended for the treatment of hypertension and angina. The Prescription Drug User Fee Act (PDUFA) target action date for the completion of the FDA review is June 30, 2005.

Under terms of the agreement, Penwest will be responsible for certain pre- launch development activities, including those activities related to the FDA application and review. Prism will be responsible for the commercialization and marketing of PW2101 in the United States and Canada.

Prism made a non-refundable $4 million payment to Penwest upon signing the agreement. Penwest may also receive additional clinical and regulatory milestone payments of up to a total of $9.5 million, if certain conditions of the agreement are met, including final FDA approval before December 31, 2005. Upon product launch, Penwest will receive royalties ranging from 15 to 18 per cent (subject to reduction under certain circumstances) of net sales of the product, depending on sales levels, a release stated.

Robert J. Hennessey, president and CEO of Penwest, said, " This agreement represents a significant step for Penwest in the development of this product, the first that we have fully developed and submitted to the FDA on our own, and it marks the achievement of one of our company's priorities for 2005. We continue to expect to receive an action letter from the FDA for this product by the end of June, and look forward to the approval and commercial launch."